`
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`____________
`
`BUNGIE, INC.,
`Petitioner,
`
`v.
`
`WORLDS INC.,
`Patent Owner.
`
`_______________
`
`Case IPR2015-01264 (Patent 7,945,856 B2)
`Case IPR2015-01319 (Patent 8,082,501 B2)
`Case IPR2015-01321 (Patent 8,145,998 B2)
`____________
`
`
`
`
`PATENT OWNER WORLDS INC.’S
`RESPONSE ON REMAND FROM CAFC
`
`

`

`
`
`I. 
`
`II. 
`
`TABLE OF CONTENTS
`
`INTRODUCTION ........................................................................................... 1 
`
`ISSUE PRECLUSION DOES NOT BAR WORLDS’ ARGUMENTS ON
`REAL PARTY IN INTEREST ........................................................................ 2 
`
`A. 
`
`The Identification of All RPIs to Each Petition is Not an Identical
`Issue Among the Appealed and Non-Appealed IPRs ........................... 2 
`
`1. 
`
`2. 
`
`3. 
`
`Federal Circuit Cases Applying Issue Preclusion to Board
`Decisions are Not On Point to the Differing Issues Here ................ 6 
`
`Identity of Issue Does Not Exist Where the Burden of Proof is
`Different Between a First Action and a Second Action ................... 7 
`
`Bungie’s Argument for Issue Preclusion on the RPI Issue Would
`Lead to Absurd Results .................................................................... 8 
`
`B. 
`
`C. 
`
`D. 
`
`Bungie Fails to Meaningfully Address B&B Hardware’s Concern for
`Quality, Extensiveness, and Fairness of Procedures Followed ............. 9 
`
`The Policy Behind Cygnus’s Exemplary Exception Applies Here ..... 11 
`
`The Solicitor’s Office Agrees That Common Law-Based Issue
`Preclusion Does Not Apply at the PTAB ............................................ 12 
`
`III.  BUNGIE FAILS TO CARRY ITS BURDEN OF ESTABLISHING THAT
`ACTIVSION IS NOT AN RPI TO BUNGIE’S PETITIONS ...................... 14 
`
`A. 
`
`Bungie Has No Relevant Evidence to Carry Its Burden ..................... 15 
`
`1. 
`
`2. 
`
`3. 
`
`The Agreement Executed in 2010 Cannot Prove That Activision is
`Not an RPI in 2015 ......................................................................... 16 
`
`The Timing of Bungie’s Petitions Does Not Establish That
`Activision is Not an RPI ................................................................ 18 
`
`The Board Should Ignore Bungie’s Attorney Argument Regarding
`a Self-Serving Settlement Attempt ................................................ 19 
`
`- i -
`
`

`

`B. 
`
`C. 
`
`Bungie Ignores the Federal Circuit’s Specific Instructions and Fails to
`Apply the Legal Test for RPI Set Forth in AIT ................................... 20 
`
`Bungie Attempts to Avoid the Proper RPI Conclusion By Invoking
`Due Process Without Any Evidence ................................................... 24 
`
`D.  Activision is also a Privy of Bungie in These IPR Petitions ............... 26 
`
`E. 
`
`Bungie’s Refusal to Submit Evidence Should Not Create an Equitable
`Escape from the Statutory Requirement to Name all RPIs ................. 28 
`
`IV.  CONCLUSION .............................................................................................. 30 
`
`
`
`
`
`
`
`- ii -
`
`

`

`TABLE OF AUTHORITIES
`
`Cases 
`
`A.B. Dick Co. v. Burroughs Corp.,
`713 F.2d 700 (Fed. Cir. 1983), cert. denied, 464 U.S. 1042 (1984) ...........3, 9
`
`Applications in Internet Time, LLC v. RPX Corp.,
`897 F.3d 1336 (Fed. Cir. 2018) ............................................................. passim
`
`Aruze Gaming Macau, Ltd. v. MGT Gaming, Inc.,
`IPR2014-01288, Paper 13 (PTAB Feb. 20, 2015) .......................................... 5
`
`Astoria Fed. Sav. & Loan Ass’n v. Solimino,
`501 U.S. 104 (1991)....................................................................................... 13
`
`Atlanta Gas Light Co. v. Bennett Regulator Guards, Inc.,
`IPR2013-00453, Paper 88 (PTAB Jan. 6, 2015) ........................................... 29
`
`B&B Hardware, Inc. v. Hargis Indus., Inc.,
`135 S.Ct. 1293 (2015) ............................................................................... 9, 10
`
`Clark v. Bear Stearns & Co.,
`966 F.2d 1318 (9th Cir. 1992) ......................................................................... 7
`
`Cobb v. Pozzi,
`363 F.3d 89 (2d Cir. 2004) .............................................................................. 7
`
`Commil USA, LLC v. Cisco Sys., Inc.,
`135 S. Ct. 1920 (2015) ................................................................................... 16
`
`FCC v. Schreiber,
`381 U.S. 279 (1965)....................................................................................... 13
`
`Guenther v. Holmgreen,
`738 F.2d 879 (7th Cir. 1984) ........................................................................... 7
`
`In re Cygnus Telecom. Tech., LLC Patent Litig.,
`536 F.3d 1343 (Fed. Cir. 2008) .......................................................... 9, 11, 12
`
`Intel Corp. v. U.S. Int’l Trade Comm’n,
`946 F.2d 821 (Fed. Cir. 1991) ....................................................................... 28
`
`- iii -
`
`

`

`Johnson v. Whitehead,
`647 F.3d 120 (4th Cir. 2011) .......................................................................... 13
`Killep v. Office of Personnel Mgmt.,
`991 F.2d 1564 (Fed. Cir. 1991) ..................................................................... 13
`
`Litttlejohn v. United States,
`321 F.3d 915 (9th Cir. 2003) ........................................................................... 7
`
`MaxLinear, Inc. v. CF Crespe LLC,
`880 F.3d 1373 (Fed. Cir. 2018) ....................................................................... 6
`
`Nestle USA Inc. v. Steuben Food, Inc.,
`884 F.3d 1350 (Fed. Cir. 2018) ...................................................................6, 7
`
`Unified Patents v. Realtime Adaptive Streaming, LLC,
`IPR2018-00883, Paper 29 (PTAB Oct. 11, 2018) ......................................... 25
`
`VirnetX Inc. v. Apple, Inc.,
`909 F.3d 1375 (Fed. Cir. 2018) ...................................................................2, 4
`
`WesternGeco LLC v. ION Geophysical Corp.,
`889 F.3d 1308 (Fed. Cir. 2018) ........................................................ 20, 26, 27
`
`WiFi One LLC v. Broadcom Corp.,
`887 F.3d 1329 (Fed. Cir. 2018) ..................................................................... 10
`
`Worlds Inc. v. Bungie, Inc.,
`903 F.3d 1237 (Fed. Cir. 2018) ............................................................. passim
`
`XY, LLC v. Trans Ova Genetics, L.C.,
`890 F.3d 1282 (Fed. Cir. 2018) ....................................................................... 6
`
`Statutes 
`
`15 U.S.C. § 1069 ...................................................................................................... 14
`
`35 U.S.C. § 312(a)(2) .............................................................................................3, 5
`
`35 U.S.C. § 315(b) ........................................................................................... passim
`
`35 U.S.C. § 315(d) ................................................................................................... 13
`
`35 U.S.C. § 315(e) ...................................................................................... 13, 14, 30
`
`- iv -
`
`

`

`35 U.S.C. § 315(e)(1) ............................................................................................... 13
`
`35 U.S.C. § 325(d) ............................................................................................ 13, 14
`
`Rules 
`
`37 C.F.R. § 42.8(b)(1) ................................................................................................ 3
`
`37 C.F.R. § 42.20(c) ................................................................................................... 4
`
`37 C.F.R. § 42.24(b) .................................................................................................. 2
`
`37 C.F.R. § 42.51(b)(2)(i) ........................................................................................ 10
`
`Other Authorities 
`
`157 Cong. Rec. S1376 (daily ed. March 8, 2011) (statement of Sen. Kyl) ............. 26
`
`157 Cong. Rec. S5432 (Sept. 8, 2011) (statement of Sen. Schumer) ...................... 26
`
`18 Charles Alan Wright, et al., Federal Practice and Procedure § 4422 (2d ed.
`2002) ................................................................................................................ 8
`
`18 James Wm. Moore, et al., Moore’s Federal Practice § 132.02[4][e] (3d ed.
`1997) ................................................................................................................ 8
`
`Brief for Intervenor, Biodelivery Sciences Int’l, Inc. v. Monosol RX, LLC,
`2017 WL 2666499 (Fed. Cir. 2017) .............................................................. 12
`
`Federal Rule of Civil Procedure 26 .................................................................... 9, 10
`
`Restatement (Second) of Judgments § 27 .................................................................. 9
`
`Restatement (Second) of Judgments § 28(4) (1982) ................................................. 7
`
`Worlds Inc. v. Bungie, Inc. Oral Argument Recording (Mar. 9, 2018), available at
`http://oralarguments.cafc.uscourts.gov/default.aspx?fl=2017-1481.mp3 ....10,
`17, 29
`
`
`
`
`
`
`
`- v -
`
`

`

`IPR2015-01264, -01319, -01321 Patent Owner’s Response on Remand
`
`I.
`
`INTRODUCTION
`
`Bungie’s opening sentence in its Brief (“Bungie Br.”) raises the ultimate
`
`question here: what communications from Activision caused Bungie to file six
`
`different IPR petitions against Worlds’ patents, challenging the very claims at issue
`
`in the Activision Litigation? Bungie all but admits the communications occurred,
`
`but without evidence, it cannot carry its burden of proving that Activision is not an
`
`unnamed real party in interest (“RPI”) to Bungie’s petitions under the Federal
`
`Circuit’s test in Applications in Internet Time, LLC v. RPX Corp., 897 F.3d 1336
`
`(Fed. Cir. 2018) (“AIT”). Because Worlds served Activision with a complaint for
`
`infringement of the challenged patents more than a year before Bungie’s petitions
`
`were filed, Bungie’s petitions are time-barred due to Activision’s RPI status. See
`
`Ex. 2007 at 4-7; Ex. 2003; Ex. 2010 at 10-13; Ex. 2011.
`
`Evidence of Bungie and Activision’s pre-existing legal relationship is
`
`established by the DevPub Agreement (Ex. 2002, “Agreement”) dated April 16,
`
`2010, under which Bungie developed “Destiny,” a game published by Activision in
`
`2014. Ex. 2002 at 1 (Recital B), Ex. 1064, ¶¶2-3. On its face, the Agreement
`
`establishes that Activision had at least the opportunity to review and approve
`
`arguments advanced in this IPR.
`
`This evidence includes Section 7A.15(j) (Bungie must conduct “legal
`
`reviews” of Destiny to “ensure that all Intellectual Property and other rights are
`
`-1-
`
`
`

`

`IPR2015-01264, -01319, -01321 Patent Owner’s Response on Remand
`
`fully cleared for use”1 and such legal reviews are subject to “prior review and
`
`approval by Activision, (budget to [be] mutually approved).”); Section 14.1.2
`
`(Bungie warrants that “the use, development, distribution and publishing” of the
`
`product intellectual property “shall not infringe upon or violate the rights of, nor
`
`require consent of, any other party”); and Section 15.1, which requires Bungie to
`
`indemnify Activision for “Claims” (not just lawsuits, see Section 15.1) of patent
`
`infringement against Destiny.
`
`Bungie’s Brief fails to establish that Worlds is estopped from raising this
`
`RPI dispute on remand, fails to carry its burden of establishing that Activision is
`
`not an RPI to Bungie’s petitions, and fails to meaningfully address key points
`
`required by the Federal Circuit decision. Further, it would be improper for Bungie
`
`to raise its leading arguments on these issues for the first time on Reply. See 37
`
`C.F.R. § 42.24(b).
`
`II.
`
`ISSUE PRECLUSION DOES NOT BAR WORLDS’ ARGUMENTS
`ON REAL PARTY IN INTEREST
`A. The Identification of All RPIs to Each Petition is Not an Identical
`Issue Among the Appealed and Non-Appealed IPRs
`
`It has been long-held that for issue preclusion to apply, the law requires that
`
`the issues be identical. VirnetX Inc. v. Apple, Inc., 909 F.3d 1375, 1377 (Fed. Cir.
`
`2018); see also A.B. Dick Co. v. Burroughs Corp., 713 F.2d 700, 702 (Fed. Cir.
`
`
`1 “Intellectual Property” includes patents and patent rights. Ex. 2002, Sec. 6.1.
`
`-2-
`
`
`

`

`IPR2015-01264, -01319, -01321 Patent Owner’s Response on Remand
`
`1983), cert. denied, 464 U.S. 1042 (1984). As a critical defect in its argument for
`
`issue preclusion, Bungie fails to establish that the issue of whether Activision was
`
`an RPI to each petition was an identical issue among all petitions.
`
`In its opinion remanding these IPRs back to the Board, the Federal Circuit
`
`took the view that the RPI determination may be unique to each petition. Worlds
`
`Inc. v. Bungie, Inc., 903 F.3d 1237, 1247 (Fed. Cir. 2018) (“But in our view, the
`
`determination of whether a party is a real party in interest may differ from one IPR
`
`to the next, even among a set of seemingly related IPRs.”). Bungie fails to deal
`
`with this statement, and instead glosses over the identical issue requirement by
`
`concluding without analysis that “[t]he RPI issue in the final IPRs was identical to
`
`the RPI issue in the appealed IPRs.” Bungie Br., 3. It goes on to say that “[i]n
`
`each IPR, Worlds argued that each petition was barred by 35 U.S.C. §§ 312(a)(2),
`
`315(b), and 37 C.F.R. § 42.8(b)(1) because the petition did not list Activision as an
`
`RPI.” Id. But just as the Federal Circuit acknowledged, the identification of a
`
`petition’s RPIs is specific to that petition. This is in accordance with governing
`
`statute. See 35 U.S.C. § 312(a)(2) (requiring each petition to identify all real
`
`parties in interest to that petition). The Federal Circuit similarly explained that
`
`“[c]orrectly identifying all real parties in interest with respect to each petition is
`
`important, as the determination may impact whether a petition may be instituted.”
`
`Worlds, Inc., 903 F.3d at 1240 (emphasis added).
`
`-3-
`
`
`

`

`IPR2015-01264, -01319, -01321 Patent Owner’s Response on Remand
`
`Indeed, the Federal Circuit’s view was correct under the law: the questions
`
`of whether Activision was an RPI to the petitions in IPR2015-01268, -01269, and -
`
`01325 are not identical to whether Activision was an RPI to the petition in
`
`IPR2015-01264, the petition in IPR2015-01319, or the petition in IPR2015-01321.
`
`More precisely, the issue in IPR2015-01264 is whether Activision was an RPI to
`
`the petition filed in IPR2015-01264. The issue in IPR2015-01319 is whether
`
`Activision was an RPI to the petition filed in IPR2015-01319. The issue in
`
`IPR2015-01321 is whether Activision was an RPI to the petition filed in IPR2015-
`
`01321. These are not identical issues to issues in the unappealed IPRs.
`
`This is logical. Two petitions filed by the same petitioner could have
`
`different RPIs. For example, a non-party who neither funds nor controls a first
`
`petition could later fund and exert control over a second petition filed by the same
`
`petitioner. The RPI question in the second proceeding is unique to that proceeding.
`
`Moreover, it is Bungie’s burden to set-out in its opening brief how the RPI
`
`issue is identical between IPR2015-01268, -01269 and -01325 and the appealed
`
`IPRs. Bungie avoids such a comparison, and instead argues that since Worlds’ RPI
`
`arguments were the same in each IPR and the result was the same, issue preclusion
`
`applies. Bungie Br., 3-5. That is not the law. In order to apply issue preclusion,
`
`the burden is on Bungie to affirmatively show that the legal issue was identical.
`
`See VirnetX Inc., 909 F.3d at 1377; 37 C.F.R. § 42.20(c).
`
`-4-
`
`
`

`

`IPR2015-01264, -01319, -01321 Patent Owner’s Response on Remand
`
`Bungie confuses the legal issue with the outcome reached by the Board in
`
`each IPR, but later acknowledges that each final written decision was specific to
`
`that IPR, stating that the “Board entered a different final written decision … in
`
`each case.” Bungie Br., 5. Bungie made similar concessions regarding the
`
`Board’s institution decision issued in “each case.” Id. at 4. More precisely, the
`
`Board concluded in each IPR that Activision was not an unnamed RPI to that IPR
`
`petition. That does not mean that the legal issue—whether Activision was an RPI
`
`to any petition—was identical for all petitions. See Worlds Inc., 903 F.3d at 1247
`
`(“[I]n our view, … a real party in interest may differ from one IPR to the next …
`
`.”). Statute requires that the issues are different. 35 U.S.C. § 312(a)(2).
`
`This result squares with the Board’s prior analysis. As the Board has
`
`previously held, “RPI is the relationship between a party and a proceeding.” Aruze
`
`Gaming Macau, Ltd. v. MGT Gaming, Inc., IPR2014-01288, Paper 13 at 11 (PTAB
`
`Feb. 20, 2015) (emphasis in original). Whether Activision has a relationship to
`
`each proceeding is a unique question for each proceeding (see 35 U.S.C. §
`
`312(a)(2)), and issue preclusion cannot attach to any one proceeding based on a
`
`relationship (or lack thereof) between Activision and a separate proceeding.
`
`This outcome is also wholly consistent with the statute and with the Federal
`
`Circuit’s observation that the determination of whether a party is an RPI in one
`
`IPR may differ from whether that party is an RPI in the next IPR, even where the
`
`-5-
`
`
`

`

`IPR2015-01264, -01319, -01321 Patent Owner’s Response on Remand
`
`IPRs appear to be related. Worlds Inc., 903 F.3d at 1247. Because the RPI
`
`analysis is specific to each petition, there is no identical issue against which issue
`
`preclusion would apply here. The Board should evaluate these separate issues and
`
`determine that Activision is an RPI to each petition currently before it.
`
`1.
`Federal Circuit Cases Applying Issue Preclusion to Board
`Decisions are Not On Point to the Differing Issues Here
`
`Bungie identifies cases where issue preclusion has been applied by the
`
`Federal Circuit to Board decisions. See Bungie Br., 7. Unlike this proceeding,
`
`those cases actually involved identical issues and are therefore distinguishable.
`
`See XY, LLC v. Trans Ova Genetics, L.C., 890 F.3d 1282, 1294 (Fed. Cir. 2018)
`
`(identical issue was patent invalidity); MaxLinear, Inc. v. CF Crespe LLC, 880
`
`F.3d 1373, 1376-77 (Fed. Cir. 2018) (“the collateral-estoppel effect of an
`
`administrative decision of unpatentability generally requires the invalidation of
`
`related claims that present identical issues of patentability.”) (emphasis added).
`
`In Nestle USA Inc. v. Steuben Food, Inc., 884 F.3d 1350 (Fed. Cir. 2018),
`
`the common issue was construction of “aseptic,” where the claims at issue in two
`
`commonly owned patents used the term “aseptic” “in a similar fashion.” Id. at
`
`1351. “More critically, the two patents also provide[d] identical lexicography for
`
`the term ‘aseptic’ in their specifications.” Id. at 1352 (emphasis added). Ensuring
`
`that the issue was identical across two patents, the Federal Circuit noted that
`
`“[n]either party has pointed to any material different between the two patents or
`
`-6-
`
`
`

`

`IPR2015-01264, -01319, -01321 Patent Owner’s Response on Remand
`
`their prosecution histories that would give rise to claim construction issues in this
`
`appeal different from those raised in the prior appeal.” Id.
`
`Unlike in XY, MaxLinear, and Nestle, the statutory RPI analysis is specific to
`
`each petition, and there is no identical issue against which preclusion can apply.
`
`2.
`Identity of Issue Does Not Exist Where the Burden of Proof
`is Different Between a First Action and a Second Action
`
`The Board’s previous handling of Bungie’s burden to prove RPI also bars
`
`issue preclusion. Relitigating an issue is not precluded where the “adversary has a
`
`significantly heavier burden [in the second action] than he had in the first action.”
`
`Restatement (Second) of Judgments § 28(4) (1982). “To apply issue preclusion
`
`[when the burden of proof is different in the second action] would be to hold, in
`
`effect, that the losing party in the first action would also have lost had a
`
`significantly different burden [been] imposed.” Id. at § 28, cmt. f.
`
`Logically, “a shift or change in the burden of proof can render the issues in
`
`two different proceedings non-identical,” thereby barring issue preclusion. Cobb v.
`
`Pozzi, 363 F.3d 89, 113-14 (2d Cir. 2004) (citations omitted); Litttlejohn v. United
`
`States, 321 F.3d 915, 923-24 (9th Cir. 2003); see also Clark v. Bear Stearns & Co.,
`
`966 F.2d 1318, 1322 (9th Cir. 1992) (“estoppel does not preclude claims that have
`
`a different burden of proof”); Guenther v. Holmgreen, 738 F.2d 879, 888 (7th Cir.
`
`1984) (“issue preclusion may be defeated by shifts in the burden of persuasion or
`
`by changes in the degree of persuasion required.”) (citation omitted)); see also 18
`
`-7-
`
`
`

`

`IPR2015-01264, -01319, -01321 Patent Owner’s Response on Remand
`
`Charles Alan Wright, et al., Federal Practice and Procedure § 4422 (2d ed. 2002);
`
`18 James Wm. Moore, et al., Moore’s Federal Practice § 132.02[4][e] (3d ed.
`
`1997) ( “issue preclusion does not apply when the party seeking to benefit from
`
`preclusion has a significantly heavier burden in the subsequent action”).
`
`Per the Federal Circuit, the Board’s prior decision put the burden of proof on
`
`Worlds, or at best, was unknown, thus confirming that Bungie’s burden was
`
`incorrectly low. Worlds Inc., 903 F.d at 1246. On remand, Bungie must carry the
`
`burden. Under these facts, issue identity cannot be established, and issue
`
`preclusion cannot apply based on the Board’s decisions in the unappealed IPRs.
`
`3.
`Bungie’s Argument for Issue Preclusion on the RPI Issue
`Would Lead to Absurd Results
`
`Bungie also fails to recognize, as the Federal Circuit did, that different IPR
`
`petitions could have different RPIs. Bungie’s argument—that the correct naming
`
`of all RPIs to a petition is a common issue across multiple petitions—would lead to
`
`absurd results. Consider a scenario where a petitioner fails to name a time-barred
`
`party as an RPI to a first petition. If the Board denies the first petition as time-
`
`barred under § 315(b), the Board would deny subsequent petitions from that
`
`petitioner without regard to the time-barred party’s relationship to those
`
`subsequent petitions. This result cannot be correct, and Bungie offers no
`
`explanation how the Board would avoid this absurd result.
`
`
`
`-8-
`
`
`

`

`IPR2015-01264, -01319, -01321 Patent Owner’s Response on Remand
`
`B.
`Bungie Fails to Meaningfully Address B&B Hardware’s Concern
`for Quality, Extensiveness, and Fairness of Procedures Followed
`
`Even if the RPI issue were common among all IPRs (which it isn’t), this
`
`issue has not been fully and fairly litigated, another requisite of issue preclusion.
`
`See A.B. Dick Co., 713 F.2d at 702; In re Cygnus Telecom. Tech., LLC Patent
`
`Litig., 536 F.3d 1343, 1349 (Fed. Cir. 2008). Bungie characterizes Worlds’
`
`dissatisfaction with the original Board decision as “disagreement with the
`
`decision” (Bungie Br., 8), but the Federal Circuit itself recognized the defect in the
`
`Board’s weighing of argument over evidence. Worlds Inc., 903 F.3d at 1246
`
`(Board may have placed the burden on Worlds, and its reliance on attorney
`
`argument “seemed to outweigh the actual evidence presented by Worlds.”).
`
`This defect implicates a concern raised by the Supreme Court in B&B
`
`Hardware, Inc. v. Hargis Indus., Inc., 135 S.Ct. 1293 (2015). There, the Court
`
`considered whether a TTAB finding in an opposition proceeding has preclusive
`
`effect on a later federal court proceeding. Citing to the Restatement (Second) of
`
`Judgments § 27, the Supreme Court recognized an exception to issue preclusion
`
`where there were “differences in the quality or extensiveness of the procedures
`
`followed” in a prior suit. Id. at 1303. In holding that estoppel applied to TTAB
`
`proceedings, the Court emphasized the similar discovery procedures before the
`
`TTAB and before federal district courts. Id. at 1300. In particular, noting that the
`
`TTAB has adopted “almost the whole of Federal Rule of Civil Procedure 26,”
`
`-9-
`
`
`

`

`IPR2015-01264, -01319, -01321 Patent Owner’s Response on Remand
`
`(“FRCP 26”) the Court stated there was no “reason to doubt the quality,
`
`extensiveness, or fairness” of the TTAB’s procedures because they were, for the
`
`most part, exactly the same as a federal court’s. Id. at 1309.
`
`Unlike in the TTAB, a clear distinction in procedures exists between the
`
`PTAB and federal court. When Congress established the PTAB, it did not adopt
`
`the broad discovery rules of FRCP 26; rather, “[d]iscovery in inter partes review
`
`proceedings is more limited than in proceedings before district courts or even other
`
`proceedings before the PTO. ” WiFi One LLC v. Broadcom Corp., 887 F.3d 1329,
`
`1338 (Fed. Cir. 2018). Unlike the broad discovery standard of FRCP 26, “[t]he
`
`Board’s rules provide that a party seeking additional discovery ‘must show that
`
`such additional discovery is in the interest of justice.’” Id. (citing 37 C.F.R. §
`
`42.51(b)(2)(i)). Here, the Board denied Worlds’ request for routine/additional
`
`discovery despite Worlds having placed the RPI issue in dispute. Worlds Inc., 903
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`F.3d at 1244 n.8. This implicates questions of quality, extensiveness, and fairness,
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`particularly since it was Bungie’s burden to refute Activision’s status as RPI, not
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`Worlds’ burden to seek discovery to prove that status. See Oral Arg. at 47:31-
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`47:46 (Mar. 9, 2018), available at
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`http://oralarguments.cafc.uscourts.gov/default.aspx?fl=2017-1481.mp3 (Judge
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`O’Malley stating, “But there’s a difference between allowing them discovery and
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`probing your position beyond attorney argument to require you to submit proofs…
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`IPR2015-01264, -01319, -01321 Patent Owner’s Response on Remand
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`or additional proofs. There’s a difference between that.”).
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`Further, the Federal Circuit has already spoken on the quality, extensiveness,
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`and fairness of the Board’s RPI findings below, noting its “concern that the Board
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`may have relied on attorney argument as evidence that Activision was not
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`controlling or funding these IPRs” and “the Board’s apparent reliance on such
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`statements seemed to outweigh the actual evidence presented by Worlds.” Worlds,
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`Inc., 903 F.3d at 1246. If the Board were to apply issue preclusion on remand, it
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`would perpetuate this improper reliance on Bungie’s attorney argument over the
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`actual evidence presented by Worlds despite this clear defect in “quality,
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`extensiveness, or fairness” of procedures followed below.
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`C. The Policy Behind Cygnus’s Exemplary Exception Applies Here
`Bungie also buries its discussion of In re Cygnus Telecom. Tech., which the
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`Federal Circuit cited as an exemplary exception to issue preclusion “where a party
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`did not appeal all cases consolidated in a multi-district litigation proceeding.”
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`Worlds, Inc., 903 F.3d at 1248. Bungie attempts to distinguish Cygnus on the basis
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`that the six IPRs here were not consolidated below at the Board. Bungie Br., 14.
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`Notwithstanding that this argument reinforces that the RPI question is unique to
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`each petition, Bungie overlooks that the six IPRs below had common schedules,
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`consolidated depositions, and a single, consolidated hearing.
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`More importantly, Bungie fails to address the underlying policy reason for
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`IPR2015-01264, -01319, -01321 Patent Owner’s Response on Remand
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`the issue preclusion exception stated in Cygnus. As the Federal Circuit explained,
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`“[t]o adopt the defendants’ rule would promote judicial inefficiency and waste the
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`litigants’ resources, as it would require appellants to prosecute appeals against
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`every defendant in a multi-defendant case, even if there were strong practical or
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`legal reasons for narrowing the scope of the appeal.” Cygnus, 536 F.3d at 1350.
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`Here, in the three unappealed IPRs, Worlds successfully convinced the Board to
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`rule claims not unpatentable in final written decisions. See Ex. 1061, 135-36; Ex.
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`1062, 134; Ex. 1063, 70. Under Bungie’s theory, Worlds would have had to
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`appeal these decisions for the sole purpose of appealing RPI or risk application of
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`issue preclusion, even if Worlds was satisfied with its victorious defense of the
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`patentable claims. That Worlds is not pursuing its appellate rights against all
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`challenged patents should be no basis for preventing Worlds from pursuing those
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`rights against any of them. Under Cygnus, Bungie’s attempt to “promote judicial
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`inefficiency and waste the litigants’ resources” should be rejected.
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`D. The Solicitor’s Office Agrees That Common Law-Based Issue
`Preclusion Does Not Apply at the PTAB
`In its Brief as intervenor in Biodelivery Sciences Int’l, Inc. v. Monosol RX,
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`LLC, Case Nos. 2017-1265, -1266, -1268, 2017 WL 2666499 (Fed. Cir. 2017), the
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`USPTO Solicitor argued against common law issue preclusion at the Board. “[A]ll
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`authority pursuant to which an agency may act ultimately must be grounded in an
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`express grant from Congress.” Killep v. Office of Personnel Mgmt., 991 F.2d
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`IPR2015-01264, -01319, -01321 Patent Owner’s Response on Remand
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`1564, 1569 (Fed. Cir. 1991). “While judicial preclusion rules ordinarily reflect the
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`common law, agency preclusion rules are creatures of statute. Courts must thus
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`refrain from imposing judge-made preclusion principles on agencies unless such a
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`course is dictated by statute.” Johnson v. Whitehead, 647 F.3d 120, 129 (4th Cir.
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`2011) (citing Astoria Fed. Sav. & Loan Ass’n v. Solimino, 501 U.S. 104, 108
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`(1991); FCC v. Schreiber, 381 U.S. 279, 290-91 (1965)). Congress, through the
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`America Invents Act (“AIA”), expressly established the bounds of issue preclusion
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`to be applied by the USPTO based on prior PTAB decisions. See 35 U.S.C. §§
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`315(d), 315(e), 325(d). Under the AIA, Congress mandated the instance where
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`issue preclusion is to be applied by the Board—preclusive effect is given to final
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`decisions on the same claim of the same patent. 35 U.S.C. § 315(e).2
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`Beyond that application of statutory estoppel, the AIA gives the agency
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`discretion whether to apply estoppel in other limited situations. For example, the
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`AIA permits simultaneous IPR proceedings by a petitioner, and the Director has
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`discretion to manage co-pending matters. 35 U.S.C. § 315(d). Moreover,
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`2 Bungie failed to establish unpatentability of claims 2, 3, 7, 8, 12-18, and 20 of the
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`’998 patent in IPR2015-01325, and did not appeal this final written decision. See
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`Ex. 1063, 70. Should the Board conclude that these proceedings are not time-
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`barred, it should conclude that Bungie is estopped under 35 U.S.C. § 315(e)(1)
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`from maintaining its challenges of these claims on remand in IPR2015-01321.
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`IPR2015-01264, -01319, -01321 Patent Owner’s Response on Remand
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`Congress gave the USPTO authority to determine when and whether to give
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`preclusive effect to its own prior decisions. See 35 U.S.C. § 325(d). But the
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`USPTO has not implemented any rule or issued any precedential decisions on the
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`application of estoppel to situations other than those mandated in § 315(e).
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`Without rulemaking or other guidance to implement non-statutory estoppel, the
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`Director has not authorized use of issue preclusion by the Board.
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`In contrast, Congress expressly provided for broad application of common-
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`law estoppel principles in the context of the trademark statute, specifically in 15
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`U.S.C. § 1069 which states “[i]n all inter partes proceedings equitable principles of
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`laches, estoppel, and acquiescence, where applicable may be considered and
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`applied.” No statutory analogue exists for the PTAB during inter partes reviews.
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`Had Congress intended the AIA to require broader application of common-law
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`issue preclusion principles beyond § 315(e), it could have provided the PTAB with
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`the same statutory authority to do so as the trademark statute. It did not.
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`III. BUNGIE FAILS TO CARRY ITS BURDEN OF ESTABLISHING
`THAT ACTIVSION IS NOT AN RPI TO BUNGIE’S PETITIONS
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`With no relevant evidence to refute Worlds’ RPI challenge, Bungie cannot
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`carry its burden of establishing that it was the sole RPI. As the Federal Circuit
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`acknowledged, “Worlds presented more than enough evidence to sufficiently put
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`this issue into dispute.” Worlds Inc., 903 F.3d at